Karnataka

Bengaluru: KE meet discusses unlocking value in companies

Fri, May 19 2017 02:20:57 PM

Media Release

Bengaluru, May 19: 'Do you want to unleash your potential in SME business' was the opening statement by Rachana Busari, head SME – National Stock Exchange, Mumbai. With over 16 years experience in NSE, she is responsible for listing SME companies in India, someone who see things differently. She said NSE saw what others did not see and they wanted to change the landscape for SME listing and electronic bidding.

She said, "Entrepreneurs are leaders and the business world is too complex to fight alone. The major challenge SMEs face in order to scale their business is funding. She narrated the many ways to unlock value in companies - by listing, it helps scale business and also provides succession planning. While it brings a lot of responsibility, it is equally rewarding and fulfilling. It has been an exciting journey to watch closely how SME companies excelled and created immense value in the Indian Stock Market.

"SMEs play an important role and contribute 8% of the GDP of India. SME was not part of the capital markets till 2012 and currently NSE has 1600 SME listed companies and the market has a huge potential of over 1.5 trillion dollars. Seeing this potential the Government of India launched Emerge NSE in 2012 and discovered that there are 1.3 million SMEs in India and they account for 45 % of manufacturing," she said.

Clifton D’Silva, managing director of Altina Securities spoke on value creation for listed companies. He said the government is encouraging this initiative but the SME sector has not been able to unleash its full potential.

He said the cost to list a company is not very expensive and costs between Rs 30 to 50 lac. One could upgrade to the main board subsequently. “Most entrepreneurs in the SME segment work through their life span for the banks by paying interest on debt. India did not have this platform until 2012.”

Listing also helps in succession planning for the company. If the founder at one point wants to move out, he could become a passive investor. He narrated a couple of examples by way of comparison of a listed and an unlisted company and proved how advantages are huge for listed companies. The premium funds helps the company to grow and also gives the advantage. "Your net worth is much higher when your company is listed," he said. "The intangibles are immense when you list through market valuation." The boom is available do not miss it was his advice. He said, many organisations run their business, create great value in a lifetime and is finally destroyed because of lack of succession.

“Many startups raise money from families and friends, then through neighbourhood banks and then find it difficult to scale further. Listing is the next best option. The credibility is high and the benefits are huge, including the visibility. The publicity country-wide is free,” said D’Silva.

Mahavir Lunawat, group founder and MD - Pantomath Capital, Mumbai spoke on the benefits of listing. He said, "For an SME to be listed, required paid-up capital is lesser than Rs 10 crore. Listing is a very efficient way of raising capital. One can buy and sell shares and it is liquid, while in a private limited company the shares are not liquid. The biggest saving is that companies do not pay interest when capital is raised. 75% of SME companies on NSE in India which are listed, come from Gujarat and Maharashtra. He said most owners tend to differ their decision to be listed. They think 'it is too early' or 'wait' or 'it is not for us'. India is the fastest growing SME market in the world. It is not the size but the growth that matters. Equity is a risk for the investors and they benefit by taking that risk. The risk to the promoters is minimised."

One important factor he stated was that large companies are finding it difficult to grow in big leaps whereas smaller companies have a greater opportunity to grow. He concluded by saying that SMEs have a great value which has to be unlocked. There is a big difference in book value vs market value and market value is always higher. "There are benefits on taxes for the public while buying and selling shares of a listed company. The process is simple and fast," he said and reiterated that Pantomath Capital will extend all support to help to get a company listed.

Peter Anil Rego, president warmly welcomed the guests and said the greatest benefit at KE is to network and flourish. He added that we enrich ourselves and we save time and effort in all our endeavours. KE has friendly mentors and is a testimony that 'if we do go to find a friend you may never find one, but if we go out to be a friend, we will find many'. The golden rule of KE is 'to make friends before you need them', which is a key ingredient of success through networking.

The opening address was given by George Timothy and he narrated a parable about determination and how success can be achieved only if you take risk. He said no one has made it big without taking a risk; however it should be a calculated risk.

Naveen D’Souza, director membership, inducted 16 new members, which was a record of sorts. KE membership has now grown to 190 strong members and are hopeful to cross 200 soon.

It was a great day to remember - the new app of KE was launched by the president. A small step but a giant leap for KE indeed. There was all round applause when the president announced that KE would have its own office soon, one more feather in the cap.

The newsletter for the JFM quarter was released and mementoes were given to all the members who helped in supporting KE in getting new members.

The vote of thanks was proposed by the smart and striking Niveditha Sequeira.

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Title : Bengaluru: KE meet discusses unlocking value in companies

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